Goldman Sachs has debuted its second of several planned exchange-traded notes (ETN), the Claymore CEF Index-Linked GS Connect. The new ETN began trading on the NYSE Arca on Dec. 10.

Exchange-traded notes are senior, unsecured long-term notes issued by investment banks and have only been available since June 2006. An ETN is more tax efficient than an exchange-traded fund because it is not required to distribute dividends to investors every year (see MME 8/3/07, 10/22/07). It can also track indexes more closely and cost less because it owns a single note tracking the benchmark rather than individual stocks. However, according to one industry estimate, while ETFs had $572.12 billion at last count as of the end of November, these notes have already amassed $4 billion.

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